Banker hedges his optimism in 2001 forecast

He says the county will see growth but, like the nation, will edge close to a recession.

By CHASE SQUIRES

© St. Petersburg Times, published January 9, 2001

DADE CITY -- As goes the nation, so will go Dade City, and hometown banking guru Hjalma Johnson sounded cautiously optimistic on both fronts Monday as he delivered his 29th annual financial forecast at the Greater Dade City Rotary Club.

Johnson, who was president of the American Bankers Association last year and is chairman of the group's nominating committee this year, considered several factors for his annual prognostication. For this year's report, he studied stocks and Federal Reserve rates, presidential policies, consumer confidence, the gross domestic product and global trends, among other things.

Johnson said he thinks the nation will come close to, but escape, a recession, buoyed by a Fed rate cut earlier this month and another he expects at the end of the month.

Interest rate cuts take time to take effect, but even the news of a decrease can spur investment, he said.

"Are we in a recession? Absolutely not," Johnson told a packed hall of Rotarians. "But for a lot of people, it's going to feel an awfully lot like a recession."

Johnson said things could get worse before they get better.

In his forecast, he predicts slightly higher unemployment and inflation in the coming year, a higher trade deficit, fewer housing starts, and fewer auto and truck sales.

But Johnson also calls for a drop in the prime lending rate and a dip in the mortgage lending rate, to 7 percent.

Interest rates and a pending federal tax cut, he said, will be key to Florida's economic health.

Pasco County, he said, is seeing quality growth and attracting new residents with enough wealth to fuel more growth. And declining mortgage rates will make it easier for newcomers to sell their homes in the North and buy homes down here.

"We are very driven by, "Can they sell their house up there?' " Johnson said.

Johnson lectures throughout the state, presenting his forecast dozens of times.

But traditionally he shares his vision with the Greater Dade City Rotary Club first.

Monday was no exception.

"You were the first to hear it," he said Monday.

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